The market's seemingly endless rally has taken a breather this week. The broad S&P 500 is off 1% for the week as worries swell about when the Federal Reserve will begin paring back its quantitative easing program and whether the world economy will be able to handle the shock when it does.

"Asset market movements over the past two days have largely reflected increased expectations of Fed tapering, adding to concerns about global growth," analysts at Barclays wrote to clients.

Even an upbeat data failed to halt the fall.

The Commerce Department said orders for long-lasting goods climbed 3.3% in April from March, significantly outpacing estimates of a 1.5% increase. Excluding the transportation segment, orders were up 1.3%, topping estimates of a 0.5% increase.

Meanwhile, a report from the Ifo Institute on investor sentiment in Germany -- generally closely watched by traders -- wasn't enough to end the global swoon. The gauge jumped five points to 105.7 in May from April.

"The firms are clearly more satisfied with their current business situation than in the previous month. The outlook for future business is unchanged and slightly positive," the report said. "The German economy remains on track in a challenging European environment."

On the corporate front, Procter & Gamble said A.G. Lafley will replace Bob McDonald as Chairman and Chief Executive Officer. The move comes amid a restructuring for the blue-chip consumer products company. Pershing Square Capital Management chief Bill Ackman said at an investor conference earlier this month that McDonald was "distracted."

In commodities, U.S. crude oil prices fell 66 cents, or 0.69%, to $93.61 a barrel. Wholesale New York Harbor gasoline dipped 0.3% to $2.82 a gallon. Gold fell $3.80, or 0.27%, to $1,388 a troy ounce.

Foreign Markets

The Euro Stoxx 50 fell 0.65% to 2759, the English FTSE 100 slid 0.82% to 6642 and the German DAX sold off by 1% to 8265.

In Asia, the Japanese Nikkei 225 jumped 0.89% to 14612 and the Chinese Hang Seng tilted lower by 0.23% to 22619.